SAP : CRM Is Dead, and Other Thoughts About the Customer Experience Market

Traditional customer relationship management (CRM) can't answer the biggest customer challenge facing companies, says Jeremy Cox, a principal analyst at UK-headquartered research firm Ovum.

For more than 20 years, Cox has been helping companies create effective CRM strategies and assess software solutions to help them succeed. But he believes that CRM is dead and that a new category has taken its place - something he calls 'the customer engagement platform,' which will help companies ensure positive customer experiences across multiple channels.

'CRM is dead and needs to be laid to rest. It's not about recording customer interactions, it's about engaging in relevant ways throughout every customer interaction journey, wherever it starts and wherever it finishes. That requires a customer engagement platform, not transactional CRM systems,' he says.

At the recent SAP Customer Experience LIVE event, I sat down with Cox to discuss the future of CRM. Here are four takeaways from our conversation.

Move Over CRM: Make Way for the Customer Engagement Platform

As Cox explains, the primary challenge facing companies today is how to deliver a consistent customer experience across all customer interactions and channels. This should not be just a front-office concern. Fulfillment is as important as the initial promise of providing a product or service, so companies also need to address the supply-side of the equation.

'Traditional CRM won't cut it,' he says. 'Today's story is around customer experience in its totality and the ability of the enterprise to support customers in a way they will want to come back - and that market is up for grabs.'

The main players include those that fought previous CRM battles, but it's a far more complex challenge.

While many organizations are still stitching together point solutions to address specific customer-facing functions, that's not an effective approach. The most important thing for companies is that they break down siloes and make sure every customer interaction triggers a contextually relevant response.

Cox says, 'Complete traceability is important and to do that you need a platform that can unify, manage, and secure the underlying interaction data. All this should initiate the appropriate activity, whether that's serving up the personalized content or providing suitable guidance for customers.'

Rules-based approaches don't scale and are too static and myopic. That's where vendors like SAP come in. An intelligence and automation layer can prod people to do the right thing at the right time, in sync with customers.

Cox believes that the old 'cobble-it-together-yourself' method fails and is magnified in B2C environments that are high volume. Because there are potentially millions of interactions, companies need a platform that can connect the data dots from multiple systems and address the complete customer experience.

The new direction? Put customers in the center and ensure that anyone who interacts with customers - for example, sales, service or commerce professionals, or back-office finance or fulfilment staff - has relevant information and insight to help customers achieve their goals.

At the same time, the system should also provide a horizontal layer that allows the company to dynamically orchestrate the entire customer experience. 'That's the direction but the real-life examples are as rare as hen's teeth,' Cox says.

Breaking Down Data Silos

To achieve a 360-degree view of customers, data needs to flow seamlessly across the company's front and back end. Siloed data won't work, Cox says.

'If you think about omnichannel commerce, it has to involve the back end,' Cox explains. 'It's easy to buy something but it's another thing to receive it.'

Cox provides this example: If there's a flood that might impact delivery, a response should be triggered, and the customer informed - that's what customers expect. But to do that, everything needs to be connected and work in real time. And that means, according to Cox, 'the data aspect is critical in terms of quality and veracity of data.'

This is where SAP has an advantage with its strong vision for dealing with data across an organization's front and back end. Cox says SAP made a smart decision to put SAP C/4HANA - the customer experience portfolio - and SAP S/4HANA - ERP 'backend' applications - on top of the in-memory platform SAP HANA.

'The fact that both are operating in the same environment gives people significant advantages,' Cox says. 'That is a unifying aspect that most vendors don't have.'

A connected environment enables companies to become intelligent enterprises and respond quickly to customers. If there's a customer event, that will initiate change that ripples across all enterprise applications.

Tactical Approaches to Customer Experience Are Bound to Fail

'Tactical approaches are bound to fail,' Cox says. As companies mature, they need to move beyond tactical CRM plans that focus on one line of business. Instead, executives need to consider customer experience as part of the company's overall growth strategy.

'Companies depend on customers for growth, so they need to treat them in a way that keeps them coming back.' Cox says this means maintaining relevance and adding value throughout the engagement.

He explains the two growth engines: The first is to deliver relevant and rewarding customer experience, the second is continuous innovation, which renews the value customers receive, either by creating in new products or services or augmenting the customer experience to create a stronger emotional attachment.

SAP helps customers augment customer experience with its microservices offerings, like SAP Cloud Platform Extension Factory, which allows companies to simply embed new functionality into customer-facing applications and respond rapidly to change.

Machine Learning Is Hot, but It's Still Early Days

Cox believes machine learning has potential but it's still very early: 'The starting point has been very tactical with localized use cases. These include helping salespeople determine which leads to follow, or marketers to evaluate the effectiveness of particular campaign activities.

'But in the more chaotic B2C environments - with millions of interactions - rules-based technologies and localized machine learning won't cut it. You need a network of machine learning algorithms that span the value chain and all customer touchpoints, to trigger contextually relevant responses in real time, and that is a much more complex challenge,' explains Cox.

As Cox sees it, right now companies are taking baby steps with machine learning to improve productivity at the department level. This provides some benefit but it is nowhere near the potential value machine learning can deliver to support customers across all touch points. The race is on - by customer engagement platform vendors like SAP - to make this happen.

To set your organization up for success, you need to offer products and solutions that customers can trust. To learn more about 'Experience You Can Trust,' visit SAP at NRF: Retail's Big Show.